With the announcement that the PRC has officially overtaken Japan as the world’s second largest economy, there is once again a perception that the People’s Republic of China is on the verge of matching, if not overtaking, the United States in terms of security.

While there are plenty of reasons to be concerned with China’s national security trajectory, the simple growth of the Chinese economy is not necessarily one of them. As ever, it is essential to keep in mind that China’s impressive economic gains occurs across a population that is still the world’s most populous (although India is rapidly catching up). Raw, general numbers of GDP size, as with population size, can be misleading.

Which is not to say that China’s economy is unimportant. As Chinese civilian and military leaders have long emphasized, military capabilities and the broader economy are inextricably linked. In recent years, the formulation “rich nation, strong army (fuguo, qiang jun)” has often been invoked.

The relationship, however, is a complex one. From the Chinese view, a strong, vibrant economy provides the wherewithal for a powerful military. Not only does it generate the financial wherewithal to supply a large military, but such an economy will almost always embody substantial industrial and technological capabilities. These are essential in order to sustain the People’s Liberation Army (PLA) in the event of “Local Wars Under Informationalized Conditions.” Only an advanced economy can build the kinds of weapons systems necessary to fight and win such wars—systems equipped with advanced sensors, precision guidance systems, a variety of warheads, supported by unmanned aerial vehicles, space-based surveillance capabilities, and networked communications and data channels.

At the same time, however, the days when the PLA enjoyed automatic priority in the allocation of national resources are long past. Today’s PLA faces resource constraints, despite long enjoying double-digit budgetary increases. The priority, as Chinese decision-makers regularly emphasize, is on “national economic development (guojia jingji jianshe).” Military production is important, but it cannot come at the expense of improving the national economy. The implicit bargain is the construction of ever greater potential military power (as embodied in the national economy and the attendant scientific and technological base), while maintaining some limits on actual military power.

The ability to transition from potential to actual power has been boosted over the years, both through the growth of the economy, as well as such measures as the recent enactment of a National Defense Mobilization Law, which provides the legal and administrative underpinning for converting the civilian economy to military ends, should that need arise.

What this highlights is a fundamental tension in how the PLA, and the Chinese leadership writ large, conceives of future wars. Is the PRC expecting to fight short-duration (albeit violent) limited wars, as its doctrinal writings on “local wars” suggest? Or is the PRC planning for large-scale, sustained wars, in which case, it will have the time (and the need) for massive mobilization? Or might it be preparing for both?

For the United States and its allies, this is an essential question to consider. While it has become almost an article of faith among the literati and the intelligentsia that major conventional wars are inconceivable, the reality, especially in Asia, is that many of the basic reasons for past wars continue to cast a baleful shadow. Territorial disputes, ethnic tensions, unresolved historical animosities regularly roil Asian inter-state relations. The PRC is elemental to many of these (e.g., the territorial disputes over the South China Sea, longstanding historical problems with Japan). Similarly, due to its alliance structures, the US, too, has at least an interest in many of these issues. It is the overlap between Beijing and Washington’s concerns that have led to the sharp exchange of words regarding South China Sea dispute resolution and the Yellow Sea naval exercises.

China’s burgeoning potential military power, as embodied within its growing economy, is likely to affect Chinese perceptions of their own capabilities, andthe degree of deference it feels it should be accorded by its neighbors. [Eds note: Remember the USNS Impeccable, pictured?] Insofar as Beijing feels it can apply economic and diplomatic pressure against its neighbors (consistent with its views of strategic deterrence or zhanlue weishe), its new rank is likely to increase its assertiveness.

From Washington, what is needed, but is unfortunately sorely lacking, is a consistent message to Beijing. The ongoing Yellow Sea naval exercises involving the USS George Washington carrier battlegroup, for example, occurs only after flip-flopping on whether the flat-top would operate in the Yellow Sea at all. Where the Chinese would likely have issued only pro forma protests in response to the original plan, the current exercises have aroused apoplectic responses from Beijing, in no small part because the Administration gave the Chinese the impression that it would not deploy the battle group to the Yellow Sea at all (by ordering it withdrawn to the Sea of Japan). Nor is such zig-zagging likely to reassure American allies.

In dealing with the second largest economy, it is to be hoped that American decision-makers can reach a consensus among themselves about what policy should be followed, and then adhere to it. It is what our allies, neutrals, and even the PRC would prefer to see.

Dean Cheng is an expert on the Chinese military at the Heritage Foundation.